The 2008 PO.com Oil Price Challenge Oct 7

Lumpy

High - $163.00
Low - $81.00
Close - $121.00

I had a dream about a month ago then woke up, out of the blue announcing to my husband "June 17, 2008 - oil will be at $158.00 to $163.00." I have no idea where that came from, because I couldn't remember the dream, which is unusual for me. So that's where my high comes from.

Nothing researched about the low and close $$ - just opened my mind for a minute and came back with those numbers.
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Snowstorm

High - $134.97

Low - $83.16

Close - $122.49

Just a guess

Twilight · Expert Joined: Mar 02, 2007 Posts: 2971 Location: UK

I am going to use this graph to illustrate my prediction, as the graph is clearly presented and using it allows me to take a cheap shot at Daniel Yergin at the same time.

We smashed through $80 in September and have not looked back. We remain near historic highs. Past years back to 2002 show a dip towards the end of the year and a renewed upward trend in the new year.

My thesis is as follows:

- This year is different, as we are staring into a recession.
- Conventional wisdom has not been overturned here; recession means a lower price. I am not going to bet against sentiment, because belief widespread enough will trump whatever we think of the fundamentals.
- Demand destruction is likely to take place in the US and elsewhere as people exhaust their credit and businesses 'right-size'.
- US MOL issues will affect gasoline prices, not oil, especially if we are looking at Cushing prices and storage is saturated.
- On the other hand, the commodity bubble comparison is mitigated by the Export Land Effect, ie cases such as what I showed for Kuwait in 2008Q4. Declining exports will support price.
- But the short term price trend line at this point is crazy. It cannot hold.
- Therefore I think that over the year, oil will trade around an average of $80 if not in the $70s.

This year's low was $50.48 on Thursday 18 January 2007 on the table to which pup55 points us. That looks like something of an aberration; the $60 level now looks like a pretty solid floor if you look at the graph. Thus for my Low prediction, I arbitrarily choose $50.48 + 20% = $60.58. Barring any forced liquidation events early on, I would expect this to be touched in the second half of 2008 when the extent of the global recession begins to become apparent.

For my Closing prediction, I will use what looks like the 2006 high, $77.03, reached on Friday 14 July 2006. I do not believe the current upward price trend will be sustained without pause, and a temporary drop down to 2006 peak levels is likely. Peak oil does not trump a global recession in the news stakes just yet, and it will be some more time before this is understood and incorporated into market behaviour. As explained above, I expect the average oil price to be dragged lower towards this mark.

My High prediction will be the inflation-adjusted all-time high as it is quoted today, $101.70. Choosing this exact figure is a little joke. I have my doubts that we will break through the $100 barrier at all, especially as the USD is recovering on the back of UK and Eurozone problems looking more severe. But you never know, we might just break it in the next couple of months on inertia, or in the aftermath of a GoM hurricane or the like, the spike in that event being higher but starting from a lower base than if some event of comparable severity were to happen now. Unlike I suspect most people on this board, I do not see another doubling taking place unless someone starts lobbing nukes around or OPEC comes clean on what it did in 1988. The possibility is remote enough for me to consider it negligible. I suspect oil prices may have peaked for now, but a small break above $100, maybe.

So, a recap:

Low: $60.58
Closing: $77.03
High: $101.70

Reasoning as above, new average in the range $75-80.

Lastly, a few words for Yergin. Don't try to take any credit if oil prices decline. You got your ass handed to you by an asset bubble. Repeatedly. All FIVE YEARS of its duration. Why should anything go down in price while credit is available on demand at abnormally low rates?
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"The American people are watching the numbers climb higher and higher at the pump and they're waiting to see what the Congress will do." - George W Bush

Shannymara · Master Joined: Oct 04, 2004 Posts: 5440 Location: Oklahoma

Low: $84
High: $138
Close: No freaking clue, I'll guess $118
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JPL

Ok I'll dip in. A few years ago we had the Christmas sweepstake as to who 'Lovely Liza' (the office hearth-throb) was going to go home with after the Christmas party.

I looked at the list of candidates, throught for a few moments, handed it back and said, 'No-one. Can my stake be that she goes back alone?'

Needless to say I won the sweepstake (grin - this gain was nothing to do with the chat I'd had with her the in the bar a while previous).

So I shall go for the blank card again. My stake is: No meaningful dollar price for oil past mid-2008 because it won't be traded in dollars much longer.

So am I in (smile)?

JP

edit:spellink

TheDude

kmann · Heavy Crude Joined: Jul 25, 2005 Posts: 318

Soft ceiling of around 130, *hard ceiling 160, soft floor around 75, *hard floor 50.

my prediction:

High 125
Low 78
Close 92.375

*hard ceiling, hard floor: it's inconceivable that the price will exceed those limits. (For a definition of inconceivable see "The Princess Bride")

Edit: After some consideration, I decided that we are near the end of a business cycle (heading for deep recession) and will hit bottom about at the end of '08. Therefore I am going to revise my numbers to the following:

High 105
Low 55
close 60

Narz

High : 164
Low : 89
Close : 152
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Concerned · Light Sweet Crude Joined: Sep 23, 2004 Posts: 1536

pup55 · Expert Joined: May 26, 2004 Posts: 3697

Aaron

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"When you understand why you dismiss all the other possible gods, you will understand why I dismiss yours." - Stephen F Roberts.

Praise HawkMan

MrBill · Expert Joined: Sep 15, 2005 Posts: 5401 Location: Eurasia

careinke

High: 213.47
Low: 78.34
Close: 184.56

Going to be a crazy year.

Cliff (Start a rEVOLution)

dust_farmer

high $140
low $70
close $130

Assuming the usa goes into recession , china and india keep growing , europe and the rest of asia is flat , and sticking the neck out, 1% decline in c+c and the us dollar doesn't fall any farther.

Bas

without significant/longlasting supply disruptions my guesses are:

high: $139.50
low: $85
close: $125